Nicaragua, country of Central America. It is the largest of the Central American republics. Nicaragua can be characterized by its agricultural economy, its history of autocratic government, and its imbalance of regional development. Almost all settlement and economic activity are concentrated in the western half of the country. The country’s name is derived from Nicarao, chief of the indigenous people living around present-day Lake Nicaragua during the late 15th and early 16th centuries. Nicaragua has a unique history in that it was the only country in Latin America to be colonized by both the Spanish and the British. Nicaragua’s population is made up mostly of mestizos (people of mixed European and indigenous ancestry). The national capital is Managua, which also is the country’s largest city and home to about one-sixth of the population.